The project which will see an educational precinct and bus exchange built on Paterson Street, in the old Birchalls building, is a partnership between the council and New Creative Group.

The council will be responsible for developing the bus exchange and an arcade walkway between the exchange and Brisbane Street Mall.

New Creative Group, which is a consortium of investors made up of Foundry, For the People and Creative Property Limited, will be responsible for the educational precinct, which will be entirely funded by private investment.

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Managing director Christopher Billing, who is also the founding director of Foundry, described Creative Property Limited as a project company backed by a leading private investment firm and other private backers.

However, he declined to name who that investment firm is or who the other investors are.

In May, Foundry came under fire for underpaying some staff entitlements on and off since 2017.

Mr Billing said the company had since received new investment and all staff had been paid their proper entitlements.

But he again declined to comment on who the new investment came from or how much was invested.

He said the delay in payment was COVID-19-related.

"It has been very challenging with COVID, we had some challenging times pre-COVID but we are absolutely exasperated by the COVID situation," Mr Billing said.

"With that [new] investment we are excited about looking for Foundry to further develop its offerings, further develop its partnerships and looking to grow into the Launceston Creative Precinct."

The Australian Education Union's TAFE division president in Tasmania, Simon Bailey, questioned the long-term viability of the precinct proposal given recent revelations about Foundry.

"This is a huge investment that Foundry claims they are going to do, so one questions the viability and their ability to be able to manage their own business," he said.

He said investments from the state and federal governments could have been better used to support infrastructure for the TAFE campus in Launceston.

"TasTAFE has moved and shut down their Launceston CBD campus due to the viability and not having the money to upkeep it and they have moved their delivery out to Alanvale," he said.

"We know students are already complaining that it is too hard to get to and the transport that is provided doesn't meet the program's requirements."

"At the end of the day they are for profit, TAFE is there for education and student outcomes ... it is disappointing again to see taxpayers' money could be funnelled into the TAFE system ... yet it is going to a private provider."

When asked if the council had any concerns about partnering with Foundry, Launceston mayor Albert van Zetten said some sections of the media had reported inaccurately but admitted he had not contacted Foundry staff about the underpayments.

Launceston Chamber of Commerce and Industry chief executive Neil Grose downplayed concerns.

"I think you are conflating a small issue with a big issue," he said.

"What this does is actually give an organisation like Foundry a really strong future. This is their expansion, this is their growth."

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